Somewhere in your offer letter, or the confidentiality-and-inventions agreement HR slid across the table on day one, there’s a sentence that says everything you invent while you work there belongs to the company. Everything. Nights, weekends, the thing in your garage.
In Minnesota, part of that sentence has been void since 1977. The Legislature said so in plain words, and it made the employer tell you so in writing.
But the part that’s void is smaller than the garage legend. An engineer once designed a transmission at home, after hours, and a federal appeals court applying Minnesota law still handed it to his employer. The address where you built it barely mattered. What mattered was what he used and what he already knew.
What does Minnesota’s invention statute actually say?
Minn. Stat. § 181.78 is three subdivisions long. Here’s the one that does the work:
Any provision in an employment agreement which provides that an employee shall assign or offer to assign any of the employee’s rights in an invention to the employer shall not apply to an invention for which no equipment, supplies, facility or trade secret information of the employer was used and which was developed entirely on the employee’s own time, and (1) which does not relate (a) directly to the business of the employer or (b) to the employer’s actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by the employee for the employer. Any provision which purports to apply to such an invention is to that extent against the public policy of this state and is to that extent void and unenforceable.
— Minn. Stat. § 181.78, subd. 1
It was 1977 Minn. Laws ch. 47, approved May 4, 1977. The wording has changed only cosmetically since: the pronouns went gender-neutral, and subdivision 3’s “after the effective date of this act” now reads “after August 1, 1977”. The structure hasn’t moved.
The statute voids the clause only “to that extent”, as applied to the invention it protects. The rest of the agreement keeps working.
To get the protection, your invention has to clear these, in this order:
- None of the employer’s equipment, supplies, facility, or trade secret information was used. Not mostly none. None.
- It was developed entirely on your own time. “Entirely” is the word that’ll get argued. A few lunch hours spent sketching it at your desk is the kind of fact an employer’s lawyer builds a case on.
- And then the relate-or-result tests: it doesn’t relate (a) directly to the employer’s business or (b) to the employer’s “actual or demonstrably anticipated research or development,” or it doesn’t result from any work you performed for the employer.
The first condition is the easiest one to blow. “Equipment” is the company laptop you ran the CAD software on. “Facility” is the office you stayed late in. And “trade secret information” isn’t just the files you could have downloaded. Under the Minnesota Uniform Trade Secrets Act it’s information that “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use” and “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Minn. Stat. § 325C.01, subd. 5. If what makes your side project work is a trade secret you learned on the job, the garage didn’t wash that off.
The garage didn’t save him
David Giere spent about ten years at Eaton Corporation as a mechanical engineer specializing in hydrostatic transmissions, the kind that go in riding mowers and snowblowers. Eaton Corp. v. Giere, 971 F.2d 136, 137–38 (8th Cir. 1992). In December 1989 he was moved to a different product line, got frustrated, and “began working at home on the design of a hydrostatic transmission device of his own.” Id. at 138. By about February 1990 he was showing drawings to Toro, one of Eaton’s largest customers, and talking price. Id. On June 18, 1990 he told Eaton his plans. Two days later he resigned. Id.
Eaton sued, and the district court declared the device Eaton’s property and enjoined him from developing or marketing it. Id. at 139. The Eighth Circuit affirmed.
His 1987 agreement carried a carve-out that, in the court’s words, “tracks the language of Minn.Stat. Ann. § 181.78 almost word for word.” Id. at 139 n.6. It didn’t help him. On the relate test, the court didn’t strain: “It would stretch the imagination and do damage to the English language to find that Giere’s device was not ‘related’ to Eaton’s business.” Id. at 140. On the result test:
The fact that he actually designed and made his device at home and after hours is of little relevance.
— Eaton, 971 F.2d at 140
He’d been able to take “a great many shortcuts in time and money spent on research, development, testing, and specifications” because of what he’d worked on at Eaton. Id. And it was “unrealistic to expect” he hadn’t used confidential information he’d picked up there. Id. (quoting Modern Controls, Inc. v. Andreadakis, 578 F.2d 1264, 1270 (8th Cir. 1978)).
Then there was Toro. Pitching one of your employer’s biggest customers while you still draw a paycheck breaks the duty of loyalty, and the court held he’d breached it. Id. at 141. That’s a separate problem from the invention clause, and an easy one to walk into.
The “or” in the statute that nobody reads
Go back to the third condition. The protected invention is one that “(1) which does not relate … or (2) which does not result” from your work. Read that literally and you need only one of the two. An invention that relates to the employer’s business but doesn’t result from any work you did for them would still clear the bar, as long as the first two conditions hold.
That’s not how the Eighth Circuit read Eaton’s contract. It treated the relate test and the result test as two separate reasons the employee lost, and said the employer’s showing on research and development “is all Eaton needed to show to satisfy the ‘relating to’ test.” 971 F.2d at 140. On that reading, either one sinks you. Eaton was reading a contract, not construing the statute, and Giere lost on both tests anyway. So the “or” never got decided.
I couldn’t find a Minnesota appellate decision construing § 181.78 at all. I searched CourtListener’s Minnesota appellate and federal collections by the section number, by the statute’s own phrases (“demonstrably anticipated research or development,” “developed entirely on the employee’s own time”), and by the doctrine’s names, and Eaton, which mentions it in passing, was the only appellate opinion that discussed it. CourtListener doesn’t index Minnesota district court files. My read of the text is that the “or” means what it says. Don’t bet a startup on a word no appellate court has ruled on yet.
Does your employer have to tell you about this?
Yes. Subdivision 3:
If an employment agreement entered into after August 1, 1977 contains a provision requiring the employee to assign or offer to assign any of the employee’s rights in any invention to an employer, the employer must also, at the time the agreement is made, provide a written notification to the employee that the agreement does not apply to an invention for which no equipment, supplies, facility or trade secret information of the employer was used and which was developed entirely on the employee’s own time, and (1) which does not relate (a) directly to the business of the employer or (b) to the employer’s actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by the employee for the employer.
— Minn. Stat. § 181.78, subd. 3
That’s why so many Minnesota invention agreements have a paragraph that reads like somebody pasted the statute in. Somebody did. Go look at yours.
And subdivision 2 bars an employer from requiring a void provision “as a condition of employment or continuing employment.”
So what happens if the employer skips the notice, or makes you sign the overbroad version to keep your job? Section 181.78 doesn’t say. No damages. No attorney fees. The only penalty is the Legislature’s catch-all: § 645.241 makes doing an act a statute prohibits a petty misdemeanor when no other penalty is set, which on its words reaches an employer that requires the void clause as a condition of the job. That’s a fine of up to $300, payable to the state, not to you. Three subdivisions, and not one of them tells you what you get when the employer ignores the other two. It isn’t on the list of chapter 181 sections that carry a private civil action under § 181.171, subd. 1, either, or on the list the labor commissioner can enforce with a compliance order under § 177.27, subd. 4. Compare the 2023 noncompete ban, where the Legislature remembered to add that a court “may award an employee who is enforcing rights under this section reasonable attorney fees.” § 181.988, subd. 2(d). The 1977 Legislature gave employees a right and a notice. The remedy, apparently, was left as an exercise for the reader.
What you clearly do get is the voidness. A clause that reaches a protected invention is “to that extent void and unenforceable”, and that’s a defense you can raise when the employer comes for the invention.
What if there’s no agreement at all?
Then the default is on your side, and it’s federal.
“Since 1790, the patent law has operated on the premise that rights in an invention belong to the inventor.” Bd. of Trs. of Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc., 563 U.S. 776, 780 (2011). The Supreme Court went on: “unless there is an agreement to the contrary, an employer does not have rights in an invention ‘which is the original conception of the employee alone.’” Id. at 786 (quoting United States v. Dubilier Condenser Corp., 289 U.S. 178, 189 (1933)). And an interest in a patent or application is “assignable in law by an instrument in writing.” 35 U.S.C. § 261.
There are two old exceptions, both laid out in Dubilier. The first is the hired-to-invent rule. If you were hired to invent a particular thing and you invent it, you’re bound to assign it, because “[h]is invention is the precise subject of the contract of employment.” 289 U.S. at 187. Or, more bluntly, “what he is paid to produce belongs to his paymaster.” Id. General employment in a field isn’t enough, though. The Court said a general employment contract isn’t read so broadly as to require assignment of an employee’s patent. Id. at 187–88.
The second is the shop right. When an employee, during working hours and with the employer’s materials and appliances, conceives and perfects an invention he then patents, the employer gets a nonexclusive right to use it. Id. at 188–89. Use it. Not own it. The invention “remains the property of him who conceived it”. Id. at 189.
Put that next to § 181.78. The Minnesota carve-out protects an invention made with none of the employer’s equipment or facilities and entirely on your own time. On those facts, the employer’s materials and working hours that a shop right is built from aren’t there. That’s my reading of the two together.
And read your contract’s verbs. In Stanford, the researcher’s university agreement said he “agree[d] to assign” his inventions; the agreement he later signed with a private company said he “will assign and do[es] hereby assign” them. Stanford, 563 U.S. at 781. The Federal Circuit read the first as “a mere promise to assign rights in the future” and the second as an assignment, and the company came out owning the researcher’s interest. Id. at 784. The Supreme Court affirmed on a different question. It held that the Bayh-Dole Act doesn’t automatically vest title to federally funded inventions in federal contractors, and it said it had “no occasion to pass on the validity” of the Federal Circuit’s reading of the two agreements. Id. at 780, 784 n.2, 793. That reading stood, and a major research university lost. That’s the kind of fine print that decides who owns a patent.
Where does this fit with the noncompete ban and trade-secret law?
Minnesota’s 2023 noncompete ban voids covenants not to compete, other than ones agreed on in the sale or dissolution of a business, in agreements entered into on or after July 1, 2023. § 181.988, subd. 2(a)–(b); 2023 Minn. Laws ch. 53, art. 6, § 1. A “covenant not to compete” is an agreement that restricts an employee, after termination, from performing work for another employer for a period, in an area, or in a similar capacity. § 181.988, subd. 1(a). An invention-assignment clause doesn’t restrict where you work. It says who owns what you made. As I read the definition, the noncompete ban doesn’t touch it, and it expressly doesn’t reach agreements “designed to protect trade secrets or confidential information.” Id. I walked through the ban at /news/minnesota-non-compete-ban-guide/, and what employers moved to after it at /news/minnesota-employee-noncompete-alternatives/.
One trap. The 2023 law also bars an employer from requiring an employee who primarily resides and works in Minnesota, as a condition of employment, to agree to litigate a Minnesota claim elsewhere or give up the substantive protection of Minnesota law. § 181.988, subd. 3(a). But subdivision 3(e) says that subdivision “applies only to claims arising under this section.” As I read it, a fight over an invention clause is a § 181.78 claim, not a § 181.988 claim, so a Delaware choice-of-law clause in your inventions agreement doesn’t get knocked out by the 2023 statute. Your argument then rests on § 181.78’s own words, that an overbroad clause is “against the public policy of this state”.
Trade-secret law runs alongside all of this. Even an invention you own outright can’t be built on information you’re not allowed to use, and misappropriation under chapter 325C is its own claim with its own remedies. That’s at /news/minnesota-trade-secrets-act-guide/. Most inventions agreements also carry an NDA, and Minnesota leaves those mostly alone; I covered the limits that do exist at /news/minnesota-employment-nda-limits/. And if the invention policy lives in the handbook rather than a signed agreement, whether it’s a contract at all is its own question, which I took up at /news/minnesota-employee-handbook-as-contract/.
If you’re building something on the side
None of this is a substitute for reading your own agreement with a lawyer. But the statute’s conditions tell you what the fight will be about, so here’s what I’d want to be able to prove:
- It never touched a company laptop, phone, account, cloud drive, lab, or shop.
- It was built off the clock, with dates to show it: commits, files, receipts, a notebook.
- It doesn’t trade on anything you learned there that the company keeps secret.
- It isn’t in your employer’s line of business or on its research roadmap, as far as you can honestly tell, and it didn’t grow out of your assignments.
- You haven’t pitched it to your employer’s customers while you still work there.
Your garage is yours. The company laptop isn’t, and neither are the secrets you learned on their dime.
Madgett Law, LLC
Madgett Law, LLC advises Minnesota employees and employers on post-employment restrictions and trade-secret exposure, and handles trade-secret disputes on both sides. If you’ve been told your side project belongs to your employer, or you’re the employer on the other side of that conversation, read about our business litigation practice, then send us a message.
Sources: Minn. Stat. § 645.241 (an act prohibited by statute with no penalty set is a petty misdemeanor); § 609.02, subd. 4a (petty misdemeanor fine of not more than $300); Minn. Stat. § 181.78 (2025), subd. 1 (assignment provision does not apply to the described invention; to that extent void and unenforceable), subd. 2 (no condition of employment), subd. 3 (written notification for agreements entered into after August 1, 1977); 1977 Minn. Laws ch. 47, § 1 (enactment; approved May 4, 1977); Minn. Stat. § 181.171, subd. 1 (sections carrying a private civil action); Minn. Stat. § 177.27, subd. 4 (sections enforceable by compliance order); Minn. Stat. § 181.988, subd. 1(a) (covenant not to compete defined; nondisclosure and trade-secret agreements excluded), subd. 2(a) (covenants void), subd. 2(b) (sale-of-business and dissolution exceptions), subd. 2(d) (attorney fees), subd. 3(a) (choice of law and venue), subd. 3(e) (choice-of-law and venue protection limited to claims under the section); 2023 Minn. Laws ch. 53, art. 6, § 1 (effective July 1, 2023, for agreements entered into on or after that date); Minn. Stat. § 325C.01, subd. 5 (trade secret defined); 35 U.S.C. § 261 (assignment by instrument in writing); Bd. of Trs. of Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc., 563 U.S. 776, 780–81, 784 & n.2, 785–86, 793 (2011); United States v. Dubilier Condenser Corp., 289 U.S. 178, 187–89 (1933); Eaton Corp. v. Giere, 971 F.2d 136, 137–41 & n.6 (8th Cir. 1992); Modern Controls, Inc. v. Andreadakis, 578 F.2d 1264, 1270 (8th Cir. 1978) (as quoted in Eaton). This article is general information about Minnesota law, not legal advice. Reading it does not create an attorney–client relationship, and no outcome is promised or implied.